Getting a grip on prosperity
Mar 2nd 2006
From The Economist print edition
What changes if intangible investment is measured properly?
ARGUING that America is ill served by its economic statistics has become fashionable. Stodgy old national-income accounts are said to do a poor job of measuring the modern “knowledge” economy. They are especially bad at picking up firms’ “intangible” investments, such as building brands or training staff. Measure this spending properly, the argument runs, and America’s true economic health would be revealed. Investment and output growth would be higher; the pesky external deficit would be lower. As Business Week put it recently, the “unmasked” American economy is “a lot stronger than you think”.